Evans v. Comptroller of Treasury, Income Tax Division

¹⁷³ Per Curiam: When he was employed by the federal government in the city of Washington in the fall of 1970, John Ford Evans, Jr. withdrew from his New Jersey law firm, sold his New Jersey residence, and purchased a house in Bethesda, Maryland. Although he contends that he retained his domicile in New Jersey, Evans concedes that he resided in Bethesda throughout 1971. In that year, Evans, a cash basis taxpayer, received $15,928.83 from his former law firm in payment for services rendered while he was a partner in that firm. Although Evans recognized the $15,928.83 payment as income for purposes of his 1971 federal income tax return and this amount was thus a part of his federal adjusted gross income for that year, he deducted the payment in preparing his State income tax return on the theory that it was not earned in Maryland.

The deficiency assessment of Maryland income tax, including interest, of $1,242.39 on the payment made by the law firm is the subject of this appeal from an order of the Maryland Tax Court. Because it would appear from the record before us that Evans has not paid the tax, and that what the Tax Court had before it was a contest of a deficiency assessment, and not a demand for a refund, we shall remand the case for the entry of a proper order, affirming the deficiency assessment. The result which we reach will remain unaffected, however, by the entry of such an order. Maryland Code (1957, 1969 Repl.

Vol., 1973 Cum. Supp.) Art. 81, § 294 (a) provides that “]e]very individual resident of this State . . . who is required to file a federal income tax return . . .” shall file a return with the Comptroller. Code (1957, 1969 Repl. Vol.) Art. 81, § 279 (i) defines a resident as “an individual domiciled in this State on the last day of the taxable year, and every other individual who, for more than six months of the taxable year, maintained a place of abode within this State, whether domiciled in this State or not (Emphasis supplied.) ¹⁷⁴ Section 284 (a) of the same Article does not mandate the method of accounting to be used by an individual taxpayer but only requires that the taxpayer compute his income “in accordance with the method of accounting regularly employed in keeping the books of such taxpayer. . . .” Section 284 (b) provides that “taxpayers reporting their income on a cash basis shall account for amounts actually or constructively received and actually expended . . . .” The crux of Evans’ argument is that since the payment of $15,928.83 was for services rendered while he